Online shopping is less of a threat to retailers than most assume. Coronavirus’ impacts hit harder and the residential market’s strength continues; topics all covered in this Debuilt Debrief.

ARTICLE OF THE WEEK

Retail Sector

Never Mind the Internet. Here’s What’s Killing Malls.

The New York Times
Bricks-and-mortar retail stores have blamed the internet for its downfall for many years. Retailers and the media often attribute slowing sales and foot traffic to the rise of online shopping. The New York Times attempts to squash this ‘myth’. Read more…

NEWS SUMMARY

Key Themes:

  • Coronavirus has hit the property industry again, with builders, student accommodation and retail suffering

  • The residential market is catering to both buyers and sellers at the moment

  • Apartment completions have dropped because of slow sales

Coronavirus
 

Coronavirus continues to dominate headlines, as reported by the AFR. Student accommodation giant Scape is urging the Federal government to lift the travel ban from China because about 25% of their booked portfolio is yet to arrive in the country. As drop out deadlines loom, Scape has seen cancellation numbers double and this will continue to increase until the travel ban is lifted. (Foreign students’ plea: ‘open the borders’ – Nick Lenaghan, 19/02/20)

Australian building contractors face delays of at least four weeks due to closed China-based factories who manufacture building materials. The extreme scarcity of materials threatens site shutdowns, which may cause contractors up to $200,000 each day a project is delayed. (Builders brace for $200k a day virus hit – Michael Bleby & Larry Schlesinger, 20/02/20)

Coronavirus is also taking a toll on the retail sector, with Vicinity Centres reporting a material decline in foot traffic at some of the company’s key centres since late January. They attribute this to fewer Chinese tourists visiting their locations, including Chadstone Shopping Centre, which is expected to experience reduced percentage rent, ancillary income and hotel bookings. (Vicinity cuts earnings outlook as virus takes a toll – Nick Lenaghan, 19/02/20)

Residential Market
 

The AFR reported that the housing market has countered coronavirus threats to Australia’s economy, resulting in the RBA keeping official interest rates steady at 0.75%. According to the RBA’s meeting minutes, there has been a strong upswing in the housing market, especially in Sydney and Melbourne. (Housing strength counters virus threat: RBA – Matthew Cranston, 18/02/20)

The Australian also reported good news in the housing sector, with REA Group’s Chief Economist Nerida Consibee stating that there is currently a buyer’s and a seller’s market. The balance of supply and demand is optimal for many parties at the moment; buyers are cashed up with interest rates low and sellers have little competition and a lot of buyers attending auctions. The number of listings is likely to increase, which will moderate prices. (We have a buyer’s and a seller’s market – Nerida Consibee, 19/02/20)

The AFR reported that land prices are booming in the residential sector, fuelled by demand for new home sites. An increase in land supply and increasing confidence is also encouraging buyers to look at land. (Land sales boom in a recovering housing market – Michael Bleby, 14/02/20)

The AFR reported that CoreLogic data revealed outer-ring city suburbs are dramatically increasing in price with first-home buyers flooding the areas. Some suburbs have seen a 14% increase in median prices since June last year. Sydney’s Warragamba and South Penrith attract first-home buyers because they are affordable and are close to high economic activity centres like Sydney’s new airport at Badgery’s Creek. (The outer suburbs joining the boom – Nila Sweeney, 19/02/20)

Apartment Sales

The AFR reported that reducing numbers of apartment sales have caused inner-city apartment completions to fall by 21% over the past 12 months. JLL released its final quarterly Residential Apartment Market Report for 2019 which revealed that despite growing confidence, developers are struggling with apartment pre-sales in the midst of a backlog of unsold stock and weak investor demand. (Inner-city apartment completions fall 21pc - Nila Sweeney, 17/02/20) Read the report’s findings on The Urban Developer: Slow Sales Drop Apartment Completions 21pc.

Auction Results

The Real Estate Conversation outlines last week’s auction results in its article Capital cities record strong auction performance from increased volume.

Construction & Development
 

In line with half yearly results, several news sources this week reported on multiple high-profile development transactions and company results involving publicly listed companies such as Charter Hall, Stockland and Mirvac.

Lendlease’s market status was also outlined in Commercial Real Estate: Lendlease rallies on post-Brexit relief.
 

Another interesting story emerged from New York city over a dispute about building heights, with a developer now ordered to remove 20 storeys from a mixed-use skyscraper overlooking Central Park. Read the article from The Urban Developer: Completed Skyscraper Ordered to Remove 20 Floors.

DESIGN & ARCHITECTURE

Botanical healing at the end of a rainbow-coloured Kids Bridge

ArchitectureAU
Perth Children’s Hospital is the recipient of a rainbow bridge which joins the hospital to Kings Park and Botanic Garden. The bridge enables patients, their families and staff the visit the park, and may in the future encourage treatment that involves outdoor activities. Read more…
 

To learn more about Debuilt Property please visit www.debuilt.com.au or email either Paul: pabrahams@debuilt.com.au or Daniel: dburger@debuilt.com.au.

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